Thursday, May 18, 2017

Stratēchery On the GOOG: "Boring Google"

From Stratēchery:

My favorite part of keynotes is always the opening. That
is the moment when the CEO comes on stage, not to introduce new products
or features, but rather to create the frame within which new products
and features will be introduced.

This is why last week’s Microsoft keynote
was so interesting: CEO Satya Nadella spent a good 30 minutes on the
framing, explaining a new world where the platform that mattered was not
a distinct device or a particular cloud, but rather one that ran on all
of them. In this framing Microsoft, freed from a parochial focus on its
own devices, could be exactly that; the problem, as I noted earlier this week, is that platforms come from products, and Microsoft is still searching for an on-ramp other than Windows.

The opening to Google I/O couldn’t have been more different. There
was no grand statement of vision, no mind-bending re-framing of how to
think about the broader tech ecosystem, just an affirmation of the
importance of artificial intelligence — the dominant theme of last
year’s I/O — and how it fit in with Google’s original vision. CEO Sundar
Pichai said in his prepared remarks:

It’s been a very busy year since last year, no different from my 13
years at Google. That’s because we’ve been focused ever more on our core
mission of organizing the world’s information. And we are doing it for
everyone, and we approach it by applying deep computer science and
technical insights to solve problems at scale. That approach has served
us very, very well. This is what has allowed us to scale up seven of our
most important products and platforms to over a billion users…It’s a
privilege to serve users at this scale, and this is all because of the
growth of mobile and smartphones.

But computing is evolving again. We spoke last year about this
important shift in computing, from a mobile-first, to an AI-first
approach. Mobile made us re-imagine every product we were working on. We
had to take into account that the user interaction model had
fundamentally changed, with multitouch, location, identity, payments,
and so on. Similarly, in an AI-first world, we are rethinking all our
products and applying machine learning and AI to solve user problems,
and we are doing this across every one of our products.

Honestly, it was kind of boring.

Google’s Go-to-Market Problem

After last year’s I/O I wrote Google’s Go-To-Market Problem,
and it remains very relevant. No company benefited more from the open
web than Google: the web not only created the need for Google search,
but the fact that all web pages were on an equal footing meant that
Google could win simply by being the best — and they did.

Mobile has been much more of a challenge: while Android remains a
brilliant strategic move, its dominance is rooted more in its business
model then in its quality (that’s not to denigrate its quality in the
slightest, particularly the fact that Android runs on so many different
kinds of devices at so many different price points). The point of
Android — and the payoff today — is that Google services are the default
on the vast majority of phones.

The problem, of course, is iOS: Apple has the most valuable customers
(from a monetization perspective, to be clear), who mostly don’t bother
to use different services than the default Apple ones, even if they
are, in isolation, inferior. I wrote in that piece:

Yes, it is likely Apple, Facebook, and Amazon are all behind Google
when it comes to machine learning and artificial intelligence — hugely
so, in many cases — but it is not a fair fight. Google’s competitors, by
virtue of owning the customer, need only be good enough, and they will
get better. Google has a far higher bar to clear — it is asking users
and in some cases their networks to not only change their behavior but
willingly introduce more friction into their lives — and its technology
will have to be special indeed to replicate the company’s original
success as a business.

To that end, I thought there were three product announcements yesterday that suggested Google is on the right track:

Google Assistant

Google Assistant was first announced last year, but it was only
available through the Allo messenger app, Google’s latest attempt to
build a social product; the company also pre-announced Google Home,
which would not ship until the fall, alongside the Pixel phone. You
could see Google’s thinking with all three products:

Given that the most important feature of a messaging app is whether
or not your friends or family also use it, Google needed a killer
feature to get people to even download Allo. Enter Google Assistant.

A problem for Google with voice computing is that it is not clear
what the business model might be; one alternative would be to start
monetizing through hardware, and so the high-end Pixel phone was differentiated by Google Assistant.

All three approaches suffered from the same flaw: Google Assistant
was the means to a strategic goal, not the end.....